captioning sponsored by macneil/lehrer productions >> lehrer: good evening. i'm jim lehrer. the iraqi parliament agreed to form a new government today after an eight-month deadlock. but a walkout by one faction underscored how fragile the deal may be. >> brown: and i'm jeffrey brown. on the "newshour" tonight: margaret warner explores the challenges the new coalition will face amid rising sectarian violence. >> lehrer: then, paul solman explains the u.s. effort to get china to stop holding down the value of its currency. >> because china is lending us the noun run our big deficits.

>> one interstation is china is basically lending us the money to buy stuff from t >> brown: we get reaction to the wide-ranging proposals to cut the federal deficit made yesterday by the leaders of a presidential commission. >> lehrer: judy woodruff talks to senator-elect chris coons of delaware. >> brown: and on this veterans day, ray suarez updates the investigations into mismarked graves and other problems at arlington national cemetery. >> one grave site was empty. one grave site had the wrong set of remains, and a third grave site had two sets of remains, only one of which matched the headstone. >> lehrer: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by:

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foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> lehrer: leaders of the main political factions in iraq finally agreed today on a new government. t development was closely watched in washington, with thousands of american troops still deployed in iraq. the iraqi political system had been paralyzed for eight long months until parliament met today. the session came hours after a new power-sharing agreement was unveiled. kurdish leader massoud barzani announced the deal, involving the kurds, prime minister nouri al-maliki's shi-ite national alliance and the coalition al-

iraqiya, backed by the sunni minority. >> ( translated ): the three top posts, which are the presidency, the prime minister post and the parliament speaker post-- the kurds will get the presidency, the national alliance will get the prime minister post and iraqiya will get the post of the parliament speaker. during yesterday's meeting and at the last moments our brothers in al-iraqiya acted with high responsibility and decided to join the government and to attend the parliament session. >> lehrer: the sunni-supported al-iraqiya was led by former prime minister ayad allawi, a secular shi-ite. his followers actually won the most seats last march, but not a majority. now, they've accepted a government that leaves prime minister al-maliki in power. and current president, jalal talibani, a kurd, retains his office as well. allawi will head a new council overseeing national security, which could be used by sunnis as

a check on maliki's power. tensions between the two men were clear today. they initially sat together in parliament. but later, allawi and 57 sunnis walked out. they wanted an immediate vote to stop purging former followers of saddam hussein. the u.s. had pushed for a strong role for sunnis in the new government, fearing they might slide back into insurgency otherwise. instead, maliki's new governing coalition includes a shi-ite bloc led by radical shi-ite cleric moktada al-sadr. that union was brokered by the government of iran, which has long advocated an iraqi government dominated by shi-ite religious parties. even so, in washington, anthony blinken-- national security adviser to vice president biden- - called the agreement a big step forward for iraq and a bad result for those whose agenda is more sectarianism and violence.

indeed, u.s. officials now hope for a slow return to stability, after months of mounting violence. just last week, coordinated attacks across baghdad killed at least 76 iraqis. days earlier, a siege on a christian church left 58 people dead. in the meantime, some 50,000 u.s. troops remain in iraq. their formal combat mission ended in august, but they still back iraqi operations and hunt terrorists. >> brown: coming up: we'll examine the stability of the new iraqi government. that's followed by: the u.s. china currency wars; the debate over tough deficit decisions; the newly-elected senator from delaware and the troubles at arlington national cemetery. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: president obama fell short today in his bid to close a free trade deal with south korea.

the u.s. wants to open south korean markets to american beef and automobiles, but talks have been stalled for several years. the president and south korean counterpart lee myung-bak had hoped to reach agreement in seoul, at the group of 20 summit. still, the president voiced hopes for a breakthrough, soon. >> we discussed the need to keep moving forwards towards a u.s./korea free trade agreement which would create jobs and prosperity in both our countries. we believe that such an agreement, if done right, can be a win-win for our people. we have asked our teams to work tirelessly in the coming days and weeks to get this completed and we are confident that we will do so. >> sreenivasan: the president also marked veterans day, by visiting a u.s. army garrison in seoul. he called the troops the best that america has to offer the world. wall street lost ground, as high-tech leader cisco cut its sales forecast again. investors also waited to see what will come from the summit of economic powers in south korea. the dow jones industrial average lost nearly 74 points to close at 11,283. the nasdaq fell 23 points to

close at 2,555. a powerful car bomb in pakistan's largest city killed at least 15 people today, and wounded dozens more. the blast in karachi hit a police compound in a highly- secured area. the u.s. consulate is about a mile from the site, along with government offices and two luxury hotels. international aid groups have launched an emergency campaign to stem a polio outbreak in central africa. there have been more than 100 deaths in recent weeks in angola, the republic of congo and its larger neighbor the democratic republic of the congo. u.n. health officials said today they hope to vaccinate some three million people. long-time movie producer dino de laurentiis died last night in beverly hills. his career spanned six decades and more than 500 films, beginning in post-war italy. his productions there included "war and peace" with henry fonda in 1955. his hollywood debut came with the oscar-winning "serpico" in 1973, with al pacino. he also produced some famous flops, including the remake of "king kong" in 1976, with a young jessica lange.

dino de laurentiis was 91 years old. those are some of the day's major stories. now, back to jeff. >> brown: and we turn again to iraq, as margaret warner continues our look at the latest developments. >> warner: it's a new government, but with many old faces in the top jobs. will it be able to tackle iraq's challenges amidst rising violence at home and outside powers, like the u.s. and iran, angling for influence? for that we go to meghan o'sullivan, deputy national security advisor for iraq and afghanistan in the last bush administration. she is now a professor of international affairs at the kennedy school at harvard. and feisal istrabadi, iraq's deputy ambassador to the u.n. between 2004 and 2007. he is now director of the center for the study of the middle east at indiana university, bloomington. thank you both for joining us. professor o'sullivan, beginning with you. such a dramatic day. first a deal on a new government, then a parliamentary walkout by iyad allawi, the

former prime minister and his sunni-backed block. is this a serious set back or is this political gamesmanship? >> good evening, margaret. thank you for having me. this is a serious development, the walkout of former president iyad allawi and the current leader of iraqiya, which is the largest... the block that won the most seats in the parliamentary election. it's serious because it calls into question whether iyad allawi himself is going to be involved in this next government. but i would also say it's a surmountable development. all the elements of a power-sharing deal are there and nothing happened today that would preclude their finalization. so i would say serious but surmountable. >> warner: how do you see it, mr. his his? ... mr. iz sphiz. >> largely i agree with megan. i think that what iyad allawi was attempting to do, he and about two-thirds of the block that he heads, was to underscore

that there is an unconsummated part of this deal that he at least... dr. allawi beliefs that he has some agreements on legislation which has yet to pass and that the passage of this list of things that he... of this legislation, i guess, is essential for him to participate fully in the next government. it should be pointed out that it was not only iyad allawi who walked out with 50 some odd people, almost two-thirds of his block. the incoming speaker of parliament walked out also. this is not an incidental... this was not an incidental event. >> warner: megan o'sullivan, this occurred as senior white house officials were having a background grieving on the phone with reporters and talking about how inclusive this new government is. is it, in fact... if the deal

does go through, is it inclusive? is there a meaningful role for all the different parties? in particular for the sunnis who felt marginalized? >> well, i think some of it, as you suggested, remains to be seen. but certainly on the face of it if this deal does go through as anticipated it will be a very inclusive government and that has been a priority for the iraqis and for the obama administration given the fragility of iraqi society. but so often inclusiveness comes at the expense of effectiveness. the most common complaint of prime minister maliki in this previous administration was that he was constrained by the national unity nature of his government, by having people in his cabinet who didn't share the same political agenda. so i think that while this may be an inclusive government, we still don't know how workable a government it's going to be. there are many open questions. for instance, iyad allawi, the position that he is rumored to have accepted, is one that is not in the constitution and its

powers are not yet defined. >> warner: this is head of this new sort of strategic council that has yet to be, as you said, defined. >> exactly. the national council on political strategies. and presumably it has some authorization over national security, but more specifically over national reconciliation. but, again, this isn't anywhere written in the constitution so whether or not this is a real and meaningful role for iyad allawi is yet to be determined and that, i think, will really at the end of the day speak to iraqis and whether this is a government of many equals or whether this is a government that is... that has placed a role for sunnis that has been more marginal than anticipated today. >> warner: feisal istrabadi, do you think this government can govern, can hang together and govern? >> no, i do not. because the fact of the matter is this idea of a government of national unity, if i may say so

with all respect, has been a kind of an american bugaboo since 2005. and earlier. there is no shared agenda between the kurdish factions, even the kurdish factions themselves are not agreed as to what the agenda going forward should be. but there is certainly no shared agenda between the kurdish fangses and the various shi'a religious fangses that have come together to be the principal supporters of this government let alone the iraq kia that we've been talking about. so in the absence of a shared vision of where iraq goes from here, i don't see how they can govern effectively. >> warner: let me interrupt quickly before we run out of time. what is this going to mean for the violence we've been seeing on the rise in iraq, mr. istrabadi? >> i don't see any indications

that nouri al-maliki has the first idea of what to do about the rising violence. the violence cannot be dealt with-- and we've been saying this for five years-- merely militarily. there has to be reconciliation amongst the various factions. nothing in nouri al-maliki's history indicates that he is prepared to undertake such reconciliation. >> warner: megan o'sullivan, your prospect of tamping down this violence. will this be enough to make sunnis in the streets, essentially, feel included? >> well, the political project of the last five or six years has been one to convince the sunni minority from which the insurgency arose to convince that group of people that they will get more through politics than they will get through violence. and if iraqiya, this party we've been discussing, does play a meaningful role in this next government, if iyad allawi is able to exercise real powers under this portfolio of national reconciliation, i think you can continue to make the argument that, yes, it's clear that

politics are a better instrument of power than violence. if it turns out... >> warner: following up, megan o'sullivan, the u.s. and iran in particular tried to influence this outcome quite heavily. who won out there? >> i think one of the interesting things about this outcome is that it is one that is certainly acceptable to the u.s. administration and i think acceptable to iran. that in many cases iran was most interested in seeing that iyad allawi was not prime minister and therefore supported the current prime minister, nouri al-maliki, for a second term because they perceived he was the one who was most likely to keep out iyad allawi from the premiership. and america, i think, is also happy with this outcome. i think in general there's a tendency to overstate the role of external powers. they play a significant role, but at the end of the day i think iraqis are still in the position where they're able to make the final call on their politics. you don't have iran or america orchestrating this whole thing.

>> warner: mr. istrabadi, on that point, who's going to have more influence? is this good for the u.s.? >> the deal to ensuring that the next prime minister of iraq came from one of the shi'a religious parties was struck in tehran, in the capital of iran. it pushed extremely hard for nouri al-maliki and one of the great mysteries of these events is that the united states also pushed extremely hard to undermine iyad allawi and to make nouri al-maliki prime minister. in minute, iranian stock is soaring right now in iraq and long-term american interests have plummeted. >> warner: feisal istrabadi, megan o'sullivan, thank you both. >> thank you. >> thank you. >> lehrer: next tonight, the u.s./china clash over currency.

the issue dominated a meeting between president hu jintao and president obama in seoul, korea today. "newshour" economics correspondent paul solman explains what's behind the dispute. it's part of his reporting on "making sense of financial news." >> reporter: at the g20 meeting in south korea this week, conflicts over currency. the most recent one: that the federal reserve's printing of more dollars-- so-called quantitative easing-- could upset the world economy. but this story is about a longer-standing issue: the u.s. and others pressing china to stop controlling its currency, stop holding down its value, which continues to give chinese products and companies a supposedly unfair global edge. >> net, net, you have seen a small move lower in the dollar, but not appreciably so. >> reporter: david steck, who runs the foreign exchange desk of nomura securities in new york, showed us how the dollar

has been faring against the chinese renminbi. >> so here you're looking at a long-term chart. >> reporter: for many years china glued its currency to the u.s. dollar. but starting in 2005, china loosened its grip, letting the value of the dollar fall against the renmimbi-- some 20% over three years. but in 2008 the world financial crisis hit and china re-glued the renminbi to the dollar. in the aftermath, china has recovered, while the u.s. economy limps along, our unemployment rate distressingly high. >> reporter: the u.s. wants this to happen. this move right here. we want to get back on this path. that the dollar go down in value against the renminbi. >> reporter: cause we can then sell more exports and then import less. >> correct. and perhaps preserve some more manufacturing jobs. >> reporter: but that's just how china looks at it, says m.i.t. economist yasheng huang. >> the chinese have export sector as a large employer, and

they tend to be larger in terms of employment as compared to companies that don't sell abroad. so when premier wen jiabao said that the currency appreciation is going to have a very substantial negative effect on unemployment, i agree with him. >> reporter: but how exactly does china control the value of its currency? certainly not in markets like this. >> every day at 9:15 beijing time, the central bank, the people's bank of china in conjunction with safe who's the state administration for foreign exchange, issues a circular to all the banks in china. and what that circular says is: this is going to be the reference rate of the dollar against the renminbi for today. >> reporter: suppose the ford motor buys some chinese steel, says david steck. >> ford pays china steel, say, $50 million, so china steel now has $50 million. now as a chinese company you want your own currency. the state bank will then issue renminbi to the steel company in exchange for those dollars and

then the state bank will go to the central bank to exchange those dollars. >> reporter: so china's central bank amasses the dollars paid to chinese companies-- hundreds of billions of dollars a year. if it simply spends them, the bank risks flooding the world with so many dollars the demand for them is bound to go down. the dollar would then drop in price. >> so they have to put those dollars somewhere. those dollars are being put in the deepest, most liquid market in the world, which is the u.s. treasury market. that is where you have this very circular logic of china running big trade surpluses, the u.s. running big deficits, but they are interlinked. >> reporter: because china is lending us the money to run our big deficits? >> one interpretation is that china is basically lending us the money to buy stuff from them. >> reporter: now at this point we could run a montage of soundbites from politicians and

even some economists about what a huge problem this is. more graphic and succinct is this futuristic fear video gone viral. >> reporter: it's about the rise of china, the decline and fall of great empires. they overspent, says the chinese professor, and went into debt. the most recent great debtor: america. >> reporter: that's one view of the chinese, but they say they're just being prudent. controlling their currency to keep what professor huang calls hot money from overheating their economy. >> hot money, money that goes back and forth very, very quickly. if you look at the u.s., the interest rates here are very, very low, the japanese interest rates are very, very low. this money needs to find a home, to park, to generate higher returns.

>> reporter: okay, so lots of hot money rushes in to china, so what's wrong with that? >> well, i mean they bid up prices; they buy up the real estate assets; they buy up the stock market assets; bid up the prices and then they have a catastrophic fall. that's the fear. >> reporter: but in actively discouraging hot money by forbidding the open trading of its currency, china opens itself to the now familiar charge: if china keeps its currency artificially low that means its products are artificially low, its companies get the business and it takes jobs from the united states. >> having a trade deficit with the united states is the function of this country simply consuming beyond its needs. it matters, the exchange rate matters when it comes down to which country will incur the trade deficit-- with china or with india or with brazil? that's the issue, right?

>> reporter: so if china's goods were more expensive than they currently are, you think the united states would still be borrowing money? >> from india, from vietnam, from brazil-- i'm not saying i agree with the chinese completely, all i'm saying is that it is very difficult to make the argument with the chinese and say: you do something about your exchange rate, but by the way we can spend the way we want. so that's not a winning argument with anybody. >> reporter: but look, says nomura's david steck, the chinese are now letting their currency become more valuable. the weaker dollar buys 2.5% less of anything priced in renminbi than at the start of the summer. >> if you extrapolate the pace of the last couple months you're getting back on that path where 5% to 7% a year is definitely in the realm, provided authorities stick to that policy. >> reporter: just across the aisle, however, are two guys who

work for david steck, yet see a falling renminbi. >> if you look at the same period with the euro here, we had a dramatic move in the other direction in the region of 7%. >> reporter: jens nordvig runs the euro desk. >> the chinese currency is a little bit stronger against the dollar. but the chinese currency is weaker against almost every other currency in the world. >> reporter: no wonder so many g20 countries are even more exercised than the u.s., especially the emerging economies of latin america, whose currencies have soared since the crisis, relative to china's. liran blum runs the latam desk. >> if we look at brazil compared to china, almost 60% to 70% appreciation since the crisis. >> reporter: so 60%! the brazilian currency appreciating, gaining in value against the chinese currency. meaning that brazilian exports are that much more expensive in the world. >> correct.

so if you make shoes in brazil its a lot more difficult to compete even in the local market against chinese import. and a lot of it is coming because the chinese have tied their currency to the dollar. >> reporter: so when we hear >> reporter: which is why the rest of the world will continue to pressure china in south korea this week. >> brown: now, another story about dollars-- this one about dollars and deficits, as the leaders of a bi-partisan commission appointed by the president offer a far-reaching and controversial plan. the proposal by the debt commission's chairmen-- alan simpson and erskine bowles-- sent out shock waves that reached all the way to president obama at the g-20 meeting in south korea. without addressing the particulars, he said he's ready to make tough decisions. and he urged those who campaigned on deficit cutting to get specific. >> unfortunately, a lot of the talk didn't match up with reality. if we are concerned about debt and deficits, then we're going

to have to take actions that are difficult and we're going to have to tell the truth to the american people. >> brown: that truth-- as democrat bowles and republican simpson see it-- involves $4 trillion in deficit reductions over a decade, starting in 2012. among their dramatic proposals: cutting hundreds of billions a year from the pentagon and domestic spending programs, while reducing the federal work force by 10%; raising the federal gasoline tax by 15 cents and ending popular tax breaks, including the deduction for home mortgage interest. in addition, the plan calls for major reform of the individual and corporate tax system aimed at closing loopholes while lowering rates. the chairmen would also cut medicare spending and raise over time the retirement age for full social security to 69, while reducing benefits for affluent seniors. for some, it was too much, too

fast: house speaker nancy pelosi quickly denounced the overall plan as simply unacceptable. and some on the commission like congresswoman jan schakowsky, an illinois democrat, rejected it as well. >> i agree that the debt and the deficit are unsustainable. but this is not the way to do it. >> brown: but another commission democrat, north dakota senator kent conrad counseled caution, this morning on abc: >> instead of shooting this down, propose an alternative; but one that does as good a job as this one does in getting us back on a sound fiscal course. >> brown: republican leaders largely withheld comment. but some conservative groups blasted the tax-increase provisions. the proposal is not the full commission's report. that is due by december first. so, the debate is on and we have our own now, with maya macguineas, president of the committee for a responsible federal budget at the new

america foundation. damon silvers is director of policy and special counsel at the afl-cio. and grover norquist, is the president of the advocacy group americans for tax reform. welcome to all of you. maya macguineas, i'll let you go first. we'll hear you're surrounded on two sides of different critiques. why do you think this is a good idea overall? >> well, i think if there's one thing we should agree on is that the deficit and debt present a real threat to this economy in the medium and long term. and this is the first time in years, really, that there's been a realistic plan that's been put out there of the kind of policies that are going to be required to address this threat. and my hope is that having this realistic blueprint out there changes the terms of the debate. no longer are we going to focus on things like "we can cut out earmarks and that will change the problem" or "we can grow our way out of it." instead we understand the parameters are large, we understand all parts of the budget will be involved and we change the terms of the debate to a more realistic one and i think that's very helpful.

>> brown: david silvers, the president of your organization immediately said "the chairman of the deficit commission just told working americans to drop dead." pretty harsh. where is the damage? >> well, the damage starts with the fact that this is not a realistic plan. it's not a starting point. as... what maya didn't say was that immediately we have a short-term jobs problem. this proposal would make it worse and it would start by making it worse in what would be perhaps the most unfair possible way which is by cutting social security benefits starting in 2012. not to affluent people, as your reporter said, but to people making more than $37,000 a year. secondly, it's not courageous. it ducks all the hard questions and it starts by ducking the hardest... by ducking the most important of all, you would think, for anyone interested in deficit reduction, which is ending the bush tax cuts for the wealthy that would that will cost a trillion dollars over the next ten years. >> brown: grover norquist, you focused immediately on the taxes versus spending equation.

>> well, they add a trillion dollars in higher taxes over the next decade. and... which is not a good idea, the economy's already overburdened with spending and taxes. but this whole commission was set up by obama so that for a full year when people said to him "why are you spending so much? why are you bankrupting the country?" he could turn and say "we have a commission that's going to do something about that." conveniently after the election. so stop asking me about all the spending. >> brown: so you don't accept it as a serious effort? >> it was never intended to be a serious effort. it was always to allow democrat congressmen and senators when they were asked how come you voted to put an extra trillion dollars in taxes and spending on energy policy and another two trillion dollars on health care spending and taxes, they could turn around and say "i'm against deficit spending, i'm for this imagination commission that's going to report after the election." >> brown: okay, but here we are. is it a serious problem? here we are now, so they put something out there. when you look at it, are there compromises that one can make on

the spending and the tax side? >> well, we're overspending. the problem is not the deficit, which is the difference between overspending and the overtaxing. but rather the overspending is the problem. all we have to do is not continue the hundred billion dollar a year increase that obama and the democrats put into domestic discretionary spending. just the domestic discretionary they jumped up a trillion dollars over the next decade. stop that, you've just take an trillion dollars dead weight loss off the american economy and this commission doesn't even do that. >> brown: but you're saying that's not enough, just to deal on the spending side? >> i'm saying the commission does much more than that. they have a lot of savings in both mandatory and discretionary spending. they go after fundamental tax reform which would raise revenues but also make the tax code much better which would be good for the economy. and they basically spread the cost of this plan across the entire budget. the problem has grown so large because we waited so long. we delayed when we should have gotten ahead of this problem that really all parts of the

budget are going to have to be affected but they can be done so gradually. and it's important to do that and the commission also recognizes that as the economy is still recovering you phase these things in gradually, they wouldn't even start immediately-- as they shouldn't-- the social security changes are phaseed in by 2050 and 2075. this is not an aggressive change. so there are times for people to adjust and these are changes that have to be done to get the debt to a sustainable level. >> brown: you started, daniel silvers, talking about the entitlement programs, social security in particular. what about on the spending side? are there cuts here that you can abide by? abide with? >> the fundamental concept of this proposal is mistaken and will aggravate, make worse, our jobs crisis and it will make it impossible... >> brown: you mean because of the timing? >> because of the timing and because... a, because of the timing and, b, because it places caps, long-term caps, on federal spending in areas that are going to cripple our competitive

capacity in the future. particularly around infrastructure. we have a $2 trillion 20th century infrastructure deficit. we are rapidly falling behind our major global competitors in 21st century infrastructure. the way this proposal would approach federal spending in the future, it would make it impossible to fund that infrastructure gap. there is nothing in this document that tells us how we're going to build our future as a country. and that combined with the attack on the economic security of middle-class americans through med t attack on medicare, the attack on social security, those two things combined make this an extraordinarily dangerous and short-sighted approach that has nothing to do with the problems our country faces in the future. >> brown: let me get a quick response on that side. >> the scare stack ticks on all these sides, this is not an attack on medicare or social security. it's trying to manage the growth. >> you're going to cut people's income in 15 months. in 15 months you're going to cut people's income.

do you deny that's so? >> brown: hold on, please. >> so they don't squeeze out other parts of the budget. also there's a very strong focus throughout the commission's plan on saying you want to make changes that are conducive to economic growth on both the tax and spending side. that means shifting away from a lot of the less-effective parts of the budget into the parts that are investment-focused and those are the kinds of things that will grow the economy over time. >> brown: i want to come back. you focused on the spending time. now come back to taxes. are there any areas... they've taken a lot of... taken a big look here. are there think areas where you could see tax increases or changes in loopholes, etc., that might help that you could accept towards closing the deficit and the debt? >> well, they're talking about raising a trillion dollars in taxes. that's not going to happen. 235 members of the house of representatives income having signed a pledge never to raise taxes. >> brown: but is there any part of that happening? i'm asking you is there any part of that. >> sure. they talked about taking the top corporate rate, which is 35%,

down towards 25%. the european average is 25%. we've priced ourselves out of the world market. we're surprised we can't compete because our corporate rate is a 35% and the average in europe-- not the lowest-- the average in europe is 25%. our top personal rates are at 35%. the rest of the world has lower rates, particularly the eastern european countries that have flat rate income taxes. we need to have lower rates. we don't need the tax increases they're talking about but lower marginal tax rates would be very helpful. >> brown: but they're offering that. offering may not be the right word. but they're putting that up, those lower rates, against some increases, a 15-cent gas tax we mentioned or getting rid of some tax loopholes. or tax breaks, rather. >> if the u.s. economy is going to grow at 2% a year for the next decade and instead you had perot growth policies of lower tax rates that gave you a 3% growth rate, just growing at 1% more a year, that brings the federal government to $5

trillion... sorry, $2.5 trillion. $2.5 trillion in additional by having 1% more growth. i'd rather get the money from growth than from higher taxes. >> brown: is the next point just all or nothing or is there a kind of debate and compromise here from your perspective. >> well, first let me say i'm in an extraordinary position of saying i completely agree with what grover just said. >> brown: okay, we've made history here. >> that growth is critical to solving our medium-term deficit problem. >> and long term. >> and long term. we certainly disagree about how to get there but i agree with what he just said about growth. if there's one message that i have today on this matter it's this this is not a starting point. this document represents a fundamental wrong direction and so in response to your question, jeff, where do we go from here?

we start someplace that begins with focusing on two things. one is ensuring that we reverse the long-term trend of our tax structure toward favoring the wealthiest americans, which this document does not do. in fact, it exacerbates it. and secondly that we focus on an approach that-to-short and medium-term policy that sets the foundation for growth through rebuilding our nation's infrastructure, our nation's competitiveness. this document does not do that. it is not a starting point. we need to start someplace else. >> brown: i'm going to give you the last word. >> if i listen to what both of the other guests are saying you're saying here's a way to spend more money and here's a way to cut more taxes and the bottom line is it's a lot more fun to add to the deficit than close it. but we've been doing that for years and one of the things that's going to stand in the way of growth is stranglehold from government debt. so what we have to do is get on top of that by a sensible

balanced plan that keeps growth issues if mind on both the tax and spending side. but we can't keep running these budget deficits indefinitely or that will strangle off the growth. and so i think we have to talk about compromise. that's where i hope the discussion turns. >> brown: all right. we'll see what the commission comes out with. december 1. maya macguineas, damon silvers and grover norquist, thank you all very much. >> thank you. >> lehrer: next, another of our conversations with november 2nd election winners. earlier this week, we talked with incoming republican senator mike lee of utah. tonight, an interview with a democrat headed to the senate. judy woodruff begins with some background. >> woodruff: democrats had fewer reasons to smile than republicans on election night, but delaware's chris coons was one of them. >> tonight, i pledge to you, to all the working families cross delaware that i will tirelessly to get our state and our nation back on track.

>> woodruff: coons, the new castle county executive, won the senate race by 16 points over republican christine o'donnell, a tea party sensation. coons, 47, was a republican himself as a young man, but switched parties in college; went on to earn degrees in both law and divinity from yale; worked with the poor and practiced law before jumping into politics. early on in the campaign, coons was given little chance, since the prohibitive favorite for the republican nomination was popular delaware congressman and former governor mike castle. but the tea party-backed o'donnell shocked the political establishment by upsetting castle in the fall g.o.p. primary and transforming coons into the front-runner. o'donnell was undone in part by her colorful, outspoken past, including a remark on a 1990's t.v. show thashe had dabbled in

witchcraft. a point she magnified in this tv ad: >> i'm not a witch. i'm nothing you've heard. i'm you. >> woodruff: coons meanwhile was buoyed by national democrats, getting joint visits from president obama and vice president biden, who held this senate seat for 36 years. >> this guy has a backbone like a ramrod. i kid him, he's got a brain bigger than his skull and he's got a heart to match both. >> woodruff: since the delaware contest was a special election to fill the remaining four years of biden's term, coons will take his senate seat next week, two months ahead of most freshmen. and i'm joined by democratic senator elect chris koontz in wilmington. thank you for joining us and congratulations. >> thank you, judy. i'm excited to be on. i appreciate the chance to be with you. >> woodruff: forgive me for starting out with this but you were originally considered a

real long-shot here. not only because you were the, i guess, second choice of your own party, the democrats, because everybody expected vice president biden's son to run, but also because mike castle, the former governor, the congressman, was expected to blow you away. now, you did win, but are you the accidental senator? >> well, judy, i think i worked very hard in my campaign. obviously my opponent changed on september 14 with the outcome of the republican primary, but the issues that i focused on from back in january when i first considered getting into this campaign didn't change up until election day. i listened, i worked hard, i went up and down the state, i connected with voters. and i ran a campaign that really focused on their concerns. on getting people back to work. on fixing our economy. on helping recreate manufacturing jobs. and on tacking the deficit and debt. and i was confident i had a strong chance against congressman castle, someone i've known 30 years and who i respect. but, again, in the general election i had a quite different type of opponent and i'm pleased

with the outcome. >> woodruff: well, speaking of the economy, one of the first things you're going to be asked to vote on when you take your seat is whether to extend the bush-era tax cuts for the wealthy as well as the middle-class. do you think they should be extended for everyone, including the wealthy? >> well, judy, i think we should extend tax relief for the vast majority of americans, for the 98% of folks who earn less than $250,000 a year. i think it's important for us to come to a bipartisan resolution of this question. i have said? the campaign-- and i intend to move in this direction as senator-- that i'm willing to compromise on extending those income tax cuts for a number of years to higher-income individuals if we can also get an agreement that extends other tax relief or other tax cuts that i'm convince have had a real impact on job creation. i've talked a lot about the research and development tax credit, about expanded tax credits for manufacturing and about some of the other tax fixes that are also on the table for expiration at the end of the

year. i think we need to look hard at all of them as a group. because every extension of a tax cut will add to our deficit and add to our debt. the best way to fix our deficit is to grow new jobs and i'm looking for information about how we can best accomplish that with tax insentsives. >> woodruff: you used the word "compromise." there's been a lot of talk in washington about whether president obama should move to the center, should compromise, to get some agreement with republicans. do you think that's a good thing for him to do? >> i think we're going to have to find bipartisan solutions to a number of the big issues facing our country. and there's no issue bigger than how to get the economy back on track. i heard from folks all up and down delaware over the last nine months that they were tired of the partisan bickering, the squabbling and in their view congress just wasn't working, wasn't focused on real solutions. there are matters of principle where i really don't think we're going to be able to find middle ground or compromise but on things like how do we get the economy moving again and how do we tackle the deficit and debt, we're all going to have to be

willing to make compromises in order to solve the real problems that the voters hired us to tackle. >> woodruff: well, you mentioned the debt and just yesterday the leaders of the presidentially appointed commission to look at the fiscal crisis came out with their own recommendations. some of them are pretty dramatic and they include things like eliminating or limiting the mortgage deduction... rather the interest paid on home mortgages as a tax deduction. is that something you could support? >> judy, i think we're going to have to let all options be on the table in tackling an historically hi-def it is. it's over $1.3 trillion for this year and a staggering amount of national debt. it's on track to hit $15 trillion in another year. i think there's a number of proposals in that draft report which i haven't had a chance to study or read, but that as you dig into them are less dramatic than they sound initially. the proposal, for example, to raise the retirement age, if i understand correctly, is supposed to be phased in over 65

years. and the proposal to phase out the mortgage the deduction was only for very expensive homes. neither of those is attractive. of course, i don't favor doing either of those things initially. but i think we have to keep all options on the table and be willing to cut some federal programs, to reduce some areas of spending and consider some revenue raisers if we're going to be serious about tackling the deficit. >> woodruff: and cut social security benefits for future retirees? >> i think we have to have all options on the table, judy. it is... we are in such a dramatically bad situation financially as a country in terms of the long-term impact of our deficit and debt that i'm going seriously consider all the proposals coming out of that commission. and work hard to try and find bipolar resolution. which may that neither side, neither republican or democrat, can come to the table saying absolutely a or b is permanently off the table. >> woodruff: another issue that's going to come up before the congress early next year, we are told, is whether to raise

the ceiling on the debt. and... almost everyone believes that that's a vote that's coming. is that something you feel you're going to have to support? >> i may have to because, frankly, i know we're not going to solve the deficit and our ballooning debt problem between now and early next year. we've got troops in the field in two different wars right now today on veterans day. the expense for that is significant. we've got an unresolved problem with health care costs and steadily increasing costs for unemployment insurance, for health care, for social security. i do think we need to make progress. and in order for me to be comfortable voting to raise the debt ceiling, i'm going to need to see we're making progress in tacking the deficit and the debt. but right after job creation i think that's our top priority as a country. >> woodruff: one other issue that's expected to come up in the lame duck or certainly in the new congress is whether to repeal "don't ask, don't tell", the policy that discourages gays from serving in the military. what is your position on that?

>> i strongly support repealing that. both based on the recommendations we've heard from the secretary of defense and leaders in the armed forces but also base tonight experience of many of our allies. i'm convinced "don't ask, don't tell" is discrimination plain and simple and doesn't have any place in our modern armed forces. >> woodruff: all right. well we are going to leave it there. senator-elect chris coons, congratulations, we look forward to seeing you in washington. >> thank you. thanks for a chance to be with you, judy. >> brown: finally on this veterans day, an update on the troubles on some hallowed ground. ray suarez has our story. >> reporter: the ceremony-- laying a wreath at the tomb of the unknowns at arlington national cemetery-- is repeated every november 11. this year, vice president biden paid tribute to the sacrifices

made by the nation's veterans, and their families. >> collectively, the generation that have served and sacrificed are the heart and should the very spine of the nation. >> reporter: this veterans day comes at a time of trouble for the nation's most well-known and visited national cemeteries. how and where veterans are buried is the focus of several investigations after army officials acknowledged last summer that remains had been mishandled and misplaced. at a press conference in june, army secretary john mchugh revealed the findings of a report by the army's inspector general. >> in sum, the i.g. found arlington's mission hampered by dysfunctional management, a lack of established policy and procedures, and an overall unhealthy organizational

climate. the report also determined the >> reporter: at least 211 sets of remains were misidentified or unaccounted for. at least four burial urns had been unearthed and their contents discarded. and despite an expensive new information system, the record- keeping was in shambles. the army swiftly made some changes ousting top managers and turned training of cemetery workers over to the veterans administration. christian davenport has been covering the story for the "washington post." >> there are 330,000 people there, what the i.g. focus on, was on three sections and there are a total of 70 sections at the cemetery. so really they're only at the beginning for their investigation in trying to find out what's going on. >> reporter: davenport said one change-- a hotline for family members to call-- has brought mixed results. in one case, the worried father of marine corps private heath warner asked that his son be exhumed to verify that the young marine's body was in the right spot.

it was, but when another grave was inspected, the plot was empty. >> well, one thing that we found is when a family member called, inquired about whether their loved one was buried in the right place, they were assured that yes, they were buried in the right place. the family member was unconvinced because they thought that the problems you know from the beginning was the paperwork system and didn't trust what the cemetery was telling them. they insisted that their loved ones gravesite was opened and when they opened the gravesite they found that the remains there were not the correct remains. >> reporter: davenport said that was an isolated case, but other mistakes could lie buried under the rows of green grass and white stones. >> it actually involved three separate gravesites, in fact one gravesite was empty, one gravesite had the wrong set of remains, the remains did not match the remains on the headstone and a third gravesite had two sets of remains, only one of which matched the headstone. >> reporter: the army's criminal

investigative command has opened its own investigation. and a senate committee probe was launched in july. >> and now we know that the problems with the graves at arlington may be far more extensive than previously acknowledged. at a conservative estimate, 4,900 to 6,600 graves may be unmarked, improperly marked or mislabeled on the cemetery's maps. >> reporter: one witness-- former top official thurman higginbotham-- refused to answer questions. >> higginbotham, do you have an opening statement? >> no, ma'am. i do not. i would like to, after consultation with counsel, i will assert my fifth amendment right to any and all questions that the committee may ask. >> reporter: higginbotham was one of the managers who was replaced. some senators have considered removing all responsibility for arlington from the army and handing it to the v.a. the v.a. administers 131 military cemeteries, all except arlington.

as the army and others address the problems with the graves, burials continue at arlington national cemetery. 18 veterans were interred yesterday and there'll be another 21 burials tomorrow. >> lehrer: again, the major developments of the day: the iraqi parliament agreed to form a new government after an eight-month deadlock. and president obama fell short in his bid to close a free trade deal with south korea. and to hari sreenivasan, in our newsroom, for what's on the "newshour" online. hari? >> sreenivasan: two more takes on veteran's day: a look at how europe celebrates armistice day and a photo essay about veterans visiting the world war two memorial on the national mall. find more about the currency story on our "making sense" page where you can also pose questions to paul solman. and betty ann bowser previews her update on health care reform in massachusetts.

all that and more is on our web site, newshour.pbs.org. jeff? >> brown: and that's the "newshour" for tonight. i'm jeffrey brown. >> lehrer: and i'm jim lehrer. we'll see you online and again here tomorrow evening with mark shields and david brooks, among others. thank you and good night. major funding for the pbs newshour has been provided by: >> opportunity is a powerful force. set it in motion, and it goes out into the world like fuel for the economy. one opportunity leading to another and another. we all have a hand in it, because opportunity can start anywhere and go everywhere. let's keep it moving. >> this was me-- best ribs in nelson county. but i wasn't winning any ribbons managing my diabetes.

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